I want to use a mixing service and I was wondering what is the right way of using it.

I have some funds in my wallet (associated with a Bitcoin Address).

Should I generate a new address in my bitcoin client (this address would be picked up from my keypool itself right now). And after generating the address, I provide this address as the receiving address (for withdraw) to the mixing service?

Second case. Let's say I want to purchase something online using my bitcoins, like dedicated hosting service or something similar. The merchant wants me to send them the Bitcoins to their bitcoin address, but if I go through the mixing service for this purpose, it would take a very long time and transactions with merchants have to be completed fast.

In cases of mixing services like bitcoinfog, the minimum time interval is 6 hours after which the withdraw process starts.

2 Answers
2

If you mix it first to a previously unused address or send it directly to the merchant via the service (ignoring the issue of timeouts on a merchant terminal if they have such a feature) the effect is the same.

The only thing to make sure is any change does not go back into an address which has not been via a coin sharing service. This will cause a link-back to your previous transactions.

The easiest way to avoid this is to have two separate wallets, one which is only been mixed and one which has not.

Thanks, could you elaborate your answer a bit? The part which talks about using two different wallets to accomplish this. So, I transfer the amount of BTC I want to mix from the original unmixed wallet to a fresh new wallet. Then, from the fresh wallet, I generate a new receiving address. Transfer the BTC from the fresh wallet to the mixing service and specify the withdraw address as the receiving address I generated using the new wallet. Is that correct?
– Neon FlashMar 30 '14 at 13:27

By two different wallets, I mean for example multibit, 2 seperate wallet files. Generate 100 addresses or the likes in each. One use for regular transactions and use another one for only coins which have been via a coin share. This way any time coins are sent to a change address you know they have all been mixed already and not linking to any service you sent coins directly to. You can switch between wallets seamlessly with multibit.
– MaxSanMar 30 '14 at 13:32

Thanks but I wanted a method without going for Multibit :) If the mixing service returns the coins to a newly generated address from a new wallet, wouldn't that be anonymous enough as well? I could then use this address for further transactions. So, the original wallet is used only to transfer BTC to the new wallet which then pops them into the mixing service and gets its output. This thing is complicated :D
– Neon FlashMar 30 '14 at 13:45

That is fine. I was assuming you were going to be doing this more than once. I think what your explaining is basically the same thing as what I m suggesting lol.
– MaxSanMar 30 '14 at 13:56

Step #1: Create a wallet on the clearnet. (We will refer to this as wallet #1)

Step #2: Buy Bitcoins, and send the amount you want to mix to wallet #1.

Step #3: Create a second wallet, this time over the Tor network. (wallet #2)

Step #4: Send your bitcoins from wallet #1 directly to wallet #2.

The reason for this is to add plausible dependability between your clearnet wallet and in-person purchases. If you are ever investigated by law enforcement or the company from which you are buying coins (this happens with Coinbase.com especially), you can reasonably claim that you sent them to someone else who controls wallet #2 (for whatever made-up reason you have in mind as your excuse for your BTC purchase). After that you have no idea/don’t care what that person did with them, nor should anyone expect you to.

Step #5: Create a third wallet, also over the Tor network. (wallet #3).

Step #6: Use Helix Grams mixer (onion link: grams7yngnpr5rzf.onion) and set up your transaction there using the address(s) from wallet #3. It is best to use multiple addresses, and to set random time delays.